Intellectual Property & Franchising Law

Anyone who has ever had Getty Images lawyer send them a letter demanding payment of retroactive fees for trivial usage of copyrighted photographs on their website will see the irony in a recent federal court decision granting a photographer $1.2 million in damages for misuse of his photographs by that company and another who took eight of his photographs from a Twitter account and subsequently published them and licensed them for use by others.

Franchisors entering into settlement agreements must be certain that the settlement agreements give the franchisor the right to make any disclosures required by the Franchise Disclosure Document ("FDD"), without breaching any confidentiality provisions in the settlement agreement.

UCITA is the Uniform Computer Information Transactions Act promulgated by the National Conference of Commissioners on Uniform State Laws. UCITA has only been adopted by two states Virginia and Maryland. For the most part, the UCITA provisions can be waived or varied by contract. Although UCITA was developed to provide basic default rules for licensing, it is widely contested and debated. Many consumer advocacy groups, as well as numerous state attorney generals, have opposed the adoption of UCITA because they argue that UCITA is biased in favor of the software industry. - Nicole J. Harrell

In my continuing quest to report on legal developments that may portend real change to the patent trial practice within the Eastern District of Virginia, today we tackle the Innovation Act (H.R. 3309) recently passed by the United States House of Representatives. That act, a mlange of politically appeasing fixes was aimed at making procedural changes that would curb the patent litigation abuses wrought by so-called trolls under the America Invents Act.Since the passage of the America Invents Act, there has been an increase in companies acquiring broad patentparticularly business method patentsand asserting them against all forms of business and not so much to enforce patent rights but rather to extract licensing fees from companies that infringe the patents. Despite contending that the broad patents are invalid, many companies end up settling for a modest license fee rather than incur the substantial costs of litigation and, in particular, the liberal discovery now afforded under the Federal Rules of Civil Procedure. To combat this growing issue, the House, by a 325 to 91 vote, passed the America Invents Act on December 5, 2013. According to the Washington Post, the chief provisions may be summed up as follows:

The Eastern District of Virginia was recently asked to review whether the Patent Trademark Office (PTO) and the Trademark Trial and Appeal Board (TTAB) properly refused to grant a trademark application based on a terms generic usage. When a party seeks review of a TTAB decision in federal district court, rather than appealing to the Federal Circuit, the parties are allowed to introduce new evidence not considered by the TTAB.

Increasingly, businesses are using promotions, including sweepstakes, contests and games of chance, in marketing their businesses or products. Such promotions are highly regulated and can raise significant compliance issues. Businesses should consider consulting counsel familiar with sweepstakes, contests and similar promotions, to ensure their sweepstakes and other promotions are fully compliant with all applicable laws.

Did you recently discover that you do not own something you thought you did, like your software, website or logo? The basic rule is that if your employee creates something for you as the employer, that is within the scope of his or her employment, then you as the employer own that work. If, however, you contract with an independent third party, then that third party owns the work unless you have agreed otherwisein writing. When engaging a third party to write code, design a website, or create copy, a logo or other materials, the terms of your engagement should be in writing and clearly state that the works are being created specifically for you and are considered works made for hire. In addition, the third party should specifically assign and transfer to you all rights, title and interest in and to the work that is being created. Without this written agreement and specific language, you dont own the work that you otherwise paid for. - Nicole J. Harrell

As this blog has noted in the past, there is a move afoot to limit the abuses of expensive patent litigation. From the Federal Rules of Civil Procedure (Amendments effective this December) and various District Court Local Rules that limit discovery to proactive judges that currently use Rule 16 Pretrial Conferences to shape the course of discovery, efforts are being made to reduce the expense and burden of these lawsuits. Now, the Senate can be named among those bodies championing this cause. According to his website, Senator John Cornyn of Texas has proposed a bill to amend Title 35 to provide:

This post, and the posts that preceded it (Parts 1-4) outline the due diligence that we recommend for prospective franchisees. For the prior blog posts on this topic, clickPart 1, Part 2, Part 3and part 4.

The Patent and Trademark Office has two sections of the Federal Trademark Register the Principal Register and the Supplemental Register. The Principal Register is reserved for distinctive marks. The Supplemental Register is for nondistinctive marks that are capable of acquiring a secondary meaning so that, as a result of long-term and extensive use, consumers know that the mark designates a source of particular products or services. The fundamental difference between the two Registers lies in the rights associated with each. The Principal Register conveys the presumptions of validity, ownership and exclusive rights to use the mark; however, marks on the Supplemental Register may always be contested. Nonetheless, registration on the Supplemental Register still provides trademark protection in that confusingly similar marks may not be registered on either the Principal Register or the Supplemental Register. - Nicole J. Harrell

In the Eastern District of Virginia, an Alexandria district court was asked to determine whether the United States Patent and Trademark Office (PTO) improperly calculated the patent term adjustment for a particular patent. The law governing the content and term of a patent is outlined in 35 U.S.C. 154. Under 154 a patent grant is issued for twenty years measured from the earliest filing date of the application. Id. However, because delays from an applicants submission to the issuance of a patent are often caused by the PTO and are generally out of the applicants control, Congress created provisions under which a patent owner can seek a patent term adjustment (PTA) for certain delays. PTAs can be sought where the PTO fails to provide a notice of allowance within fourteen months of an application filing, the PTO fails to issue a patent after three years have passed between the application and the allowance dates, or for other types of delays. 35 U.S.C. 154(b)(1). Further, an applicants own conduct can impact the calculation of a PTA where an applicant fails to engage reasonable efforts to conclude the prosecution of an application. Id. at 154(b)(2)(C)(i).

As the partial shutdown of the federal government enters its second week, many are asking what will happen to the Federal Court System in Eastern District of Virginia. In many other governmental operations, the shutdown was almost immediate. Not in the Eastern District: according to the long term plan, the United States Federal Court System will operate for 10 days on available funds. "All things considered, I think everybody feels fortunate to be here for the next 10 days, because that's not the case everywhere in the federal government," said Fernando Galindo, the Clerk of the Federal Court for the Eastern District of Virginia, which has courts in Newport News, Norfolk, Richmond and Alexandria. After that, if the shutdown continues, only those deemed "essential" will report to work, and work without pay until Congress passes a spending bill. But who's "essential" in the court system is still a matter of discussion that's being ironed out by judges and court officials, Galindo said. "Moving cases, docketing cases and making sure that the work of the court continues, we have a lot of essential people, if not all essential people," he said.[1]

The Internet Corporation for Assigned Names and Numbers (ICANN) posted recommendations for locking a domain name subject to a domain name proceeding under the Uniform Dispute Resolution Policy (UDRP) and asked for public comment on such recommendations by August 23, 2013. On September 4, 2013, a Report of Public Comment was posted by ICANN. The Report reflects that only one comment was made, and even though the comment was made after the deadline on September 1, 2013, it was not deemed necessary to reopen the comment period as the one comment was in favor of the new recommendations.

If your application to register a trademark with the Patent and Trademark Office passes the scrutiny of an examiner, it will then proceed to the publication phase and be published for opposition. Publication means that the application will be listed in the Trademark Official Gazette, which is published every Tuesday. Third parties can review the Trademark Official Gazette and corresponding online records (including your application for registration). If the third party thinks your mark infringes on a mark they own, then that third party can file an opposition to your application. If no oppositions are filed within 30 days after publication, your application should proceed to the next phase, which is registration. --Nicole J. Harrell

Plaintiff Intercarrier Communications LLC (ICC) sued defendant Kik Interactive, Inc. (Kik) for patent infringement in the Eastern District of Virginia. Kik is a Canadian corporation with its principal place of business in Ontario, Canada. The allegedly infringing product, the Kik Messenger, is a free app which allows users to send and receive text, picture, audio and video messages over an internet connection rather than through their phone carriers network. Defendant Kik filed a Motion to Dismiss for Lack of Personal Jurisdiction alleging that ICC could not establish that Kik had sufficient minimum contacts with Virginia. In order for an exercise of personal jurisdiction over a defendant to comport with constitutional due process, it must be established that the defendant has continuous and systematic contacts with the forum state OR that the cause of action arose out of or related to the defendants contact with the forum state. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985); Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011).

A company putting up an Internet website will typically put a notice at the foot of at least the home page indicating that it is the owner of the copyright for the website. Too often this is the only consideration given to copyright law as the website is created and put into use. What is not taken into consideration is that the copyright notice, in and of itself, does little to secure or protect the legal rights the website owner wants to have in the content of its website; let alone to guard against the possibility that something on the website might lead to a copyright infringement claim against the website owner. The copyright-related questions anyone creating a website should ask themselves, and any web design company they engage to help with the project, include:

A prime factor in increased litigation costs and the source of countless disputes fordistrict court judges, e-discovery has added a complicated and expensive layer to patent litigation over the last decade. Slowly, due to the uber-expense and burden associated with this modern discovery, courts have begun to fashion limits and to conform the Federal Rules of Civil Procedure to the realities of e-discovery.